Yates v. Hull Farms, Inc.

IN THE COURT OF APPEALS OF THE STATE OF IDAHO

Docket No. 51667

BENJAMIN H. YATES, and CIRCLE )
PI, LLC, ) Filed: February 7, 2025
)
Plaintiffs-Respondents, ) Melanie Gagnepain, Clerk
)
v. )
)
HULL FARMS, INC., an Idaho )
corporation, )
)
Defendant-Appellant. )
)

Appeal from the District Court of the Seventh Judicial District, State of Idaho,
Custer County. Hon. Darren B. Simpson, District Judge.

Order denying attorney fees, reversed and case remanded.

RandsLaw, PLLC; Kirk A. Melton, Twin Falls, for appellant. Kirk A. Melton
argued.

Beard St. Clair Gaffney, PA; Lance J. Schuster, Idaho Falls, for respondent. Jared
W. Allen argued.
________________________________________________

GRATTON, Chief Judge
Hull Farms, Inc. (“Hull Farms”) appeals from the order of the district court granting
Benjamin H. Yates and Circle Pi, LLC’s (collectively, “Yates”) motion to disallow attorney fees.
We reverse the order of the district court and remand.
I.
FACTS AND PROCEDURAL HISTORY
Yates and Hull Farms entered into a Purchase and Sale Agreement (PSA) for the sale of
Yates’ 2,409-acre ranch, located in Custer County, Idaho. Relevant to this appeal, the PSA
contained an attorney fees provision which stated: “If either party initiates or defends any
arbitration or legal action or proceedings which are in any way connected with this Agreement,
the prevailing party shall be entitled to recover from the non-prevailing party reasonable costs and

1
attorney’s fees, including such costs and fees on appeal.” The parties also executed an addendum
on the same day in which Yates requested that Hull Farms set aside a five-acre parcel for Yates’
personal use (“Parcel”). The addendum stated that the legal description would be determined later
during the escrow period, after a survey was recorded. The following year, the parties executed
another addendum in which the parties agreed that Hull Farms would quitclaim the Parcel to Yates
after the recording of the survey, which Yates was responsible for completing.
After execution of the most recent addendum, Yates transferred a warranty deed to the title
company. Hull Farms then executed a promissory note in favor of Circle Pi, LLC and mortgaged
the ranch to secure the note. Several months later, the title company transferred a special warranty
deed to Hull Farms. At this time, no survey had been conducted or recorded for the Parcel. Neither
one of the deeds mentioned the Parcel to be set aside, nor did they contain a reference to the PSA
or its addenda. Yates had a survey conducted the next year, but the survey was never recorded.
Later, Yates sent a letter to Hull Farms complaining that he was being locked out of the cabin on
the Parcel and that Hull Farms must convey the Parcel to Yates based on the addendum, but Hull
Farms refused. Yates then filed this action seeking specific performance requiring Hull Farms to
quitclaim the Parcel to Yates, pursuant to the parties’ agreements in the PSA.1 Yates filed a
motion for summary judgment on all claims.2
The district court held that the PSA had merged with the deeds. The court also determined
that, even without the merger, the agreement did not satisfy the statute of frauds because there was
not a sufficient legal description of the Parcel. The district court held the deeds determine the
rights of the parties and therefore Yates could not enforce the PSA. The district court denied
Yates’ motion for summary judgment and granted summary judgment in favor of Hull Farms sua
sponte. Hull Farms then sought an award of costs and attorney fees. Yates responded by filing a
motion to disallow attorney fees. The district court granted Yates’ motion and denied attorney
fees to Hull Farms. Specifically, the district court held that, (1) the PSA merged into the deeds
and because the deeds did not contain any provision regarding attorney fees, nor a reference to the
PSA, Hull Farms could not rely upon the PSA to recover attorney fees; (2) Hull Farms was not

1
Unless the addenda to the PSA are separately discussed, reference to the PSA includes the
addenda.
2
Yates’ complaint alleged claims for breach of contract, promissory estoppel, and breach of
the covenant of good faith and fair dealing.
2
entitled to attorney fees under Idaho Code § 12-120(3) because the gravamen of Yates’ claim was
not a commercial transaction; and (3) Hull Farms was not entitled to attorney fees under I.C. § 12-
121 because Hull Farms had not shown Yates brought the action frivolously. Hull Farms appeals.
II.
STANDARD OF REVIEW
A district court’s decision to award attorney fees is generally reviewed under an abuse of
discretion standard. Knudsen v. J.R. Simplot Co., 168 Idaho 256, 265, 483 P.3d 313, 322 (2021).
However, “when an award of attorney fees depends on the interpretation of a statute, the standard
of review for statutory interpretation applies, which is a question of law over which this Court
exercises free review.” Id. (internal quotations and citation omitted). “The question of whether a
district court correctly determined that a case is based on a commercial transaction for attorney
fees purposes under Idaho Code § 12-120(3) is a question of law over which this Court exercises
free review.” Carter v. Gateway Parks, LLC, 168 Idaho 428, 441, 483 P.3d 971, 984 (2020).
When a trial court’s discretionary decision is reviewed on appeal, the appellate court conducts a
multi-tiered inquiry to determine whether the trial court: (1) correctly perceived the issue as one
of discretion; (2) acted within the boundaries of such discretion; (3) acted consistently with any
legal standards applicable to the specific choices before it; and (4) reached its decision by an
exercise of reason. Lunneborg v. My Fun Life, 163 Idaho 856, 863, 421 P.3d 187, 194 (2018).
III.
ANALYSIS
A. Attorney Fees Under the PSA
Hull Farms argues that the district court erred in denying an award of attorney fees under
the PSA. Yates sued Hull Farms on provisions contained within the PSA, namely the conveyance
of the Parcel back to Yates from Hull Farms after completion of a survey. The attorney fee
provision in the PSA states: “If either party initiates or defends any arbitration or legal action or
proceedings which are in any way connected with this Agreement, the prevailing party shall be
entitled to recover from the non-prevailing party reasonable costs and attorney’s fees, including
such costs and fees on appeal.”
The terms of a contract which contain a provision for an award of attorney fees and costs
establishes the right to an award of attorney fees and costs. Gangi v. Debolt, 168 Idaho 815, 819,
488 P.3d 483, 487 (2021). In this case, the district court determined that the attorney fees provision

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in the PSA did not provide a right to attorney fees to Hull Farms because the PSA had merged into
the deeds upon completion of the transaction. Consequently, Yates could not enforce the Parcel
term in the PSA. The doctrine of merger was generally set forth in Jolley v. Idaho Securities, Inc.,
90 Idaho 373, 382, 414 P.2d 879, 884 (1966):
[T]he acceptance of a deed to premises generally is considered as a merger of the
agreements of an antecedent contract into the terms of the deed, and any claim for
relief must be based on the covenants or agreements contained in the deed, not the
covenants or agreements as contained in the prior agreement.
The deeds did not contain an attorney fee provision. Therefore, according to the district court,
because of the merger, the attorney fee provision in the PSA in effect, no longer existed and, thus,
Hull Farms was not entitled to attorney fees under that provision.3
Hull Farms argues that the merger of the PSA into the deeds does not preclude entitlement
to attorney fees under the PSA. Hull Farms points out that Idaho case law holds that attorney fees
may be awarded under a contract even though the contract is unenforceable. This Court has held
that attorney fees may be awarded to a prevailing party even though no liability under a contract
was established or where no contract was, in fact, ever formed. Hilbert v. Hough, 132 Idaho 203,
207, 969 P.2d 836, 840 (Ct. App. 1998). Where a court holds a contract is unenforceable, the
prevailing party may nonetheless be entitled to an award of attorney fees under the contract. Allied
Bail Bonds, Inc. v. Cnty. of Kootenai, 151 Idaho 405, 414, 258 P.3d 340, 349 (2011).
Consequently, Hull Farms asserts the fact that no liability was established under the PSA and the
fact that the PSA merged into the deeds did not extinguish its right to attorney fees under the PSA.
We agree.
The present case involves similar facts to those in Hilbert; particularly to the issues
surrounding attorney fees. In Hilbert, purchasers entered into an agreement to purchase five acres
from sellers. Part of the agreement was that the exact five acres would be surveyed. Hilbert, 132
Idaho at 204, 969 P.2d at 837. After the survey was completed, the sellers decided not to sell based
on, at least in part, dissatisfaction with the proposed boundaries. Id. The purchasers filed suit,

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The district court ruled that Yates’ claim based on the PSA was barred by the doctrine of
res judicata, due to prior litigation involving the sale. The district court also determined that the
PSA was not enforceable, relative to the five-acre parcel, because the PSA contained no legal
description of the property as required to satisfy the statute of frauds. See Lexington Heights
Development, LLC v. Crandlemire, 140 Idaho 276, 92 P.3d 526, 530 (2004).

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seeking specific performance of the contract. Id. The trial court granted summary judgment to
the sellers on the basis that the agreement was unenforceable due to the incomplete property
description. Id. at 204-205, 969 P.2d at 837-838. On appeal, this Court affirmed the trial court’s
decision. Id. at 206, 969 P.2d at 839. Despite having found the agreement unenforceable, we
further determined that the seller was entitled to an award of attorney’s fees on appeal pursuant to
the purchase and sale agreement. Id. at 207, 969 P.2d at 840. Specifically, we stated that a
prevailing party “may recover attorney fees even though no liability under a contract was
established or where no contract was, in fact, ever formed.” Id.
We relied on this principle in Karterman v. Jameson, 132 Idaho 910, 980 P.2d 574 (Ct.
App. 1999) wherein we held that the contract between the parties was no more than an agreement
to agree in the future and was therefore unenforceable for the purposes of specific enforcement.
Id. at 914, 980 P.2d at 578. Even though the contract was unenforceable, we stated that an attorney
fees provision in the contract may nevertheless be enforceable. Id. at 916, 980 P.2d at 580. See
also Garner v. Bartschi, 139 Idaho 430, 439, 432 80 P.3d 1031, 1040 (2003) (prevailing party
awarded attorney fees under the contract after the court found the agreement was unenforceable
due to the lack of a sufficient property description).
Yates relies on Sells v. Robinson, 141 Idaho 767, 118 P.3d 99 (2005) to argue that merger
precludes attorney fees under the PSA. Specifically, Yates points out that the Court in Sells held
that “[T]he terms of the RESPA merged into the deed, and only the deed’s language should be
considered by this Court, though according to this Court’s view, both are ambiguous.” Id. at 772,
118 P.3d at 104. However, the Court in Sells did not address the merger as it related to the attorney
fee issue, noting only that the claim in the case was not based on the purchase and sale agreement,
but on the deeds themselves. Id. The Court did not intimate that attorney fees would not be
appropriate had the claim been based on the purchase and sale agreement. Similarly, the Idaho
Supreme Court in Rose v. Martino, ___Idaho ____, ____ P.3d _____ (2025) recently held that
neither party was entitled to attorney fees under the contract because the claim was based on “a
breach of the warranty deed that did not contain an attorney fees provision.” Id. at ___, ___ P.3d
at ____. The Court stated: “Similar to the plaintiffs in Sells, in this case the Roses’ claim is not
based on the purchase and sale agreement but is based on the warranty deed, which does not
contain an attorney fee provision.” Id. Implicit in the rulings in Sells and Rose is that had the

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claims been based on the purchase and sale agreements, the court would have looked to the contract
to determine an award of attorney fees, rather than the deed.
In this case, Yates’ claims were based on the PSA the district court determined to be
unenforceable due to merger, not on the deeds. Yates argues that the principle in Hilbert is
inapplicable because there was no merger in that case. Neither the district court nor Yates has
cited a case drawing a distinction between the reasons for a contract’s unenforceability and the
entitlement to attorney fees under the contract. Nor does Yates cite any case which draws a
distinction between the effectively nonexistent contract as recognized in Hilbert and the asserted
nonexistent PSA contract because of merger in this case. As noted in Hilbert, attorney fees may
be awarded under contract even though the contract was, in fact, never validly formed.
Hull Farms also argues that, in any event, the effect of the merger does not affect all of the
PSA terms as the doctrine of merger is limited. As noted in Jolley, the Court held that under
merger, “any claim for relief” must be based on the deeds. Jolley, 90 Idaho at 382, 414 P.2d at
884. Hull Farms points out that under Idaho law the right to attorney fees is not a claim for relief.
Estate of Holland v. Metro. Prop. & Cas. Ins. Co., 153 Idaho 94, 100-01, 279 P.3d 80, 86-87
(2012) (attorney fees are not a claim for relief); Straub v. Smith, 145 Idaho 65, 72, 175 P.3d 754,
761 (2007) (“Since a right to recover attorney fees is not a claim for relief included in a pleading,
the dismissal of the pleading with prejudice does not constitute any determination of the prevailing
party’s right to recover attorney fees.”)(Justice Eismann concurring). Therefore, Hull Farms
argues the doctrine of merger does not affect the right to attorney fees under the contract.
Relatedly, Hull Farms argues that merger only encompasses the “antecedent contract”
terms related to “title, possession, quantity or emblements of land” not other collateral stipulations
of a contract. First, Hull Farms points out that Jolley cited to a 1946 New Mexico case that cited
to 84 A.L.R. 1008 which provided that:
A deed is a mere transfer of the title, a delivery so to speak of the subject-matter of
the contract. It is the act of but one of the parties, made pursuant to a previous
contract either in parol or in writing. It is not to be supposed that the whole contract
between the parties is incorporated in the deed made by the grantor in pursuance
of, or as the consummation of, a contract for the sale of land. There are many
things pertaining to the contract which it is manifest are never inserted in a deed.
The instrument of conveyance may be complete for its purpose, which is to declare
and prove the fact of conveyance; yet very naturally and commonly it is but a part
execution of a prior contract, and parol evidence is admissible to show the true
consideration for which it was given and all other parts of the transaction, not

6
inconsistent with the recitals in the deed, provided the fact of conveyance is not
affected by it.
(Internal citations omitted).
In addition, in Fuller v. Dave Callister, et al., 150 Idaho 848, 853, 252 P.3d 1266, 1271
(2011) the Court quoted and cited to Jolley:
[T]he acceptance of a deed to premises generally is considered as a merger of the
agreements of an antecedent contract into the terms of the deed, and any claim for
relief must be based on the covenants or agreements contained in the deed, not the
covenants or agreements as contained in the prior agreement.
However, there is a generally recognized exception to the foregoing rule
which exception relates to collateral stipulations of the contract, which are not
incorporated in the deed. If a stipulation makes reference to title, possession,
quantity or emblements of land it will generally be considered to inhere to the
subject matter of a warranty deed, and shall be considered merged and, thus, not
a collateral stipulation.
(Internal quotations omitted) (emphasis added). Thus, Hull Farms contends, the doctrine of merger
limits claims made to title, possession, quantity or emblements of land and not collateral
stipulations or agreements, i.e., the usual intendments of a deed. Consequently, the attorney fee
provision in the PSA was unaffected by the merger into the deeds, and may be invoked in a case,
such as here, where the claims are based on the PSA, not the deeds.
The PSA reflected that Hull Farms promised it would later convey the Parcel to Yates once
a legal description was determined. This promise was similar to the contract in Karterman in that
the parties agreed on a future agreement, but because Yates never recorded a survey for the legal
description, that future agreement never materialized. As such, the district court held that the PSA,
as it related to the terms or description of the Parcel, was unenforceable due to a lack of a sufficient
property description. Hull Farms successfully defended against this claim by Yates on the bases
of merger, statute of frauds, and res judicata. The PSA provided for an award of attorney fees to
the prevailing party should there be any litigation surrounding the PSA. Consistent with Hilbert
and other authorities discussed above, because the attorney fees provision of the PSA did not merge
into the deed, Yates based his claims on the PSA, and Hull Farms prevailed on the claim. Hull
Farms is entitled to attorney fees under the PSA even though the contract was determined to be
unenforceable. Therefore, the district court’s denial of attorney fees under the PSA is reversed.

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B. Fees Under I.C. § 12-120(3)
Hull Farms contends that the district court erred in denying attorney fees pursuant to I.C.
§ 12-120(3). Idaho Code § 12-120(3) provides:
(3) In any civil action to recover on an open account, account stated, note,
bill, negotiable instrument, guaranty, or contract relating to the purchase or sale of
goods, wares, merchandise, or services and in any commercial transaction unless
otherwise provided by law, the prevailing party shall be allowed a reasonable
attorney's fee to be set by the court, to be taxed and collected as costs.
The term “commercial transaction” is defined to mean all transactions
except transactions for personal or household purposes. The term “party” is defined
to mean any person, partnership, corporation, association, private organization, the
state of Idaho or political subdivision thereof.
There are two steps to determine whether a prevailing party may be awarded attorney fees under
I.C. § 12-120(3): (1) there must be a commercial transaction that is integral to the claim; and
(2) the commercial transaction must be the basis upon which recovery is sought. Breckenridge
Property Fund 2016, LLC v. Wally Enterprises, Inc., 170 Idaho 649, 664, 516 P.3d 73, 88 (2022).
It is not enough that a commercial transaction was tangentially involved in a particular litigation.
Id. A claim is based upon a commercial transaction when the commercial transaction constitutes
the gravamen of the claim, that is the material or significant part of a grievance or complaint. Id.
at 662-63, 516 P.2d at 86-87. Additionally, the parties must have mutuality of commercial purpose
to constitute a commercial transaction for purposes of section 12-120(3). Treasure Valley Home
Sols., LLC v. Chason, 171 Idaho 655, 661, 524 P.3d 1272, 1278 (2023).
In Farm Credit Bank of Spokane v. Stevenson, 125 Idaho 270, 275, 869 P.2d 1365, 1370
(1994), the Idaho Supreme Court determined that a transaction for the purchase of real property
for farming operations was a commercial transaction. In Brown v. Greenheart, 157 Idaho 156,
168, 335 P.3d 1, 13 (2014), the Supreme Court held that the sale of real property used to derive
income was a commercial transaction even if it involved a residence. The Court stated: “This
Court’s decisions are clear that commercial ranching and commercial farming are commercial
transactions.” Id.
The district court denied Hull Farms’ request for attorney fees under I.C. § 12-120(3)
stating:
Thus, a commercial transaction, although arguably the source of what
became Yates’ claim, was neither the integral to the claim nor the basis upon which
Yates sought recovery. The parties’ agreement to agree, which Yates desired to

8
enforce, dealt with the set aside of five acres from the Property sale for Yates’
personal use.
Yates argues that the claim was narrowly based on the promise to convey the five acres set aside
for personal use and therefore the gravamen of the lawsuit was not based on the commercial
transaction. Yates contends that, at the time of contracting, the Parcel was to be excluded from the
sale and the parties executed the first addendum which stated:
The Seller request [sic] that the Buyer excludes five acres and the house across the
road from the home place from the sale. The Seller agrees to give the Buyer a
written ‘First Right of Refusal’ to purchase the house back from the Yates family
if they ever decide to sell the house and five acres. The legal description will be
determined during the escrow period.
One year later, the parties executed another addendum which stated that Hull Farms was to
quitclaim the Parcel “held out of closing upon establishing the legal description of said acreage.
This will take place within two weeks of [Yates’] surveyor recording the legal description.” When
Yates filed his complaint, he alleged breach of contract, promissory estoppel, and breach of the
covenant of good faith and fair dealing. The basis of these claims, Yates argues, was derived from
the promise within the addenda to quitclaim and convey the Parcel to Yates for his personal use.
Consequently, according to Yates, the gravamen of the suit was not based on the commercial
nature of the transaction.
Hull Farms argues I.C. § 12-120(3) is applicable because the ranch was a commercial
enterprise, and its sale therefore is a commercial transaction. Hull Farms further argues that there
is no case law that supports the district court creating “a fiction whereby the five-acre provision
became a standalone agreement apart from the PSA.” Hull Farms points to Lee v. Willow Creek
Ranch Estates No. 2 Subdivision Homeowners’ Association, Inc., 164 Idaho 396, 398, 431 P.3d 4,
6 (2018), in which the Idaho Supreme Court determined that a commercial transaction supported
an award of attorney fees pursuant to I.C. § 12-120(3).
In Lee, the Lees and a trust owned adjoining properties and desired future development.
The parties entered into an agreement whereby the Lees would sell land to the trust and the trust
would provide the Lees with three undescribed driveway accesses from a road the trust would
construct. Lee, 164 Idaho at 398, 431 P.3d at 6. The Lees executed a warranty deed granting
ownership to the land but did not include any reference to any easement on the road to be
constructed. Id. The trust constructed the road and created three access points to the Lees’
remaining property. Id. The trust then deeded the road and other common areas to an HOA without

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reference to any easement for the Lees. Id. at 399, 431 P.3d at 7. The Lees informed the HOA
that they intended to utilize the road to develop their property, and the HOA denied the Lees use
of the road. Id. The Lees filed a declaratory relief action against the HOA. After the parties
agreed that the statute of frauds applied, the district court granted the HOA summary judgment on
the basis that neither parties’ performance nor the doctrine of equitable servitudes saved the
promise of an easement from the statute of frauds. Id.
The Idaho Supreme Court determined that the district court had correctly applied the
doctrine of merger and “under the merger doctrine the warranty deed--and not the Agreement-- is
determinative of the parties’ rights.” Id. at 401, 431 P.3d at 9. The Court then awarded attorney’s
fees pursuant to I.C. § 12-120(3) to the HOA, noting, “the dispute between the Lees and the HOA
stems from the acquisition of property to facilitate the development of a subdivision. This is a
commercial transaction. Because this case arises from a commercial transaction, the HOA is
entitled to an award of attorney fees.” Lee, 164 Idaho at 402, 431 P.3d at 10. This case, according
to Hull Farms, is analogous to Lee.
The salient point from Lee, as it relates to this case, is that a seller sued to enforce a term
of an agreement that was to carve out a property right that did not appear in the deed, did not
prevail due in part to the doctrine of merger, and the Idaho Supreme Court awarded Section 12-
120(3) fees because the whole agreement from which the subject term arose was a commercial
transaction. Yates’ claim that the Parcel is separate from the deeded ranch property is not different
from the claim in Lee that the purported easement for access points was separate from the
remaining deeded property. The transaction in each case involved and deeded commercial
property, from which both sellers later unsuccessfully claimed some separate property right.
When determining whether attorney fees may be awarded under I.C. § 12-120(3), the Court
in Breckenridge noted that the commercial transaction must be integral to the claim and the basis
upon which recovery is sought. Breckenridge, 170 Idaho at 663, 516 P.3d at 87. Further, the
Court stated:
An award of attorney’s fees is not warranted every time a commercial transaction
is remotely connected with the case. Rather, the test is whether the commercial
transaction comprises the gravamen of the lawsuit. Attorney’s fees are not
appropriate under I.C. § 12–120(3) unless the commercial transaction is integral to
the claim and constitutes the basis upon which the party is attempting to recover.
Breckenridge at 664, 516 P.3d at 88 (quoting Brower v. E.I. DuPont De Nemours and Co., 117
Idaho 780, 784, 792 P.2d 345, 349 (1990)). Yates’ complaint makes it clear that the basis for his
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claims arose from the purchase of a 2,409-acre ranch and the Circle Pi Ranch brand by Hull Farms
through a PSA--a commercial transaction pursuant Idaho case law. A portion of the agreement
was that the Parcel be given back to Yates. In the complaint, the breach of contract claim is based
on the PSA and the second count, promissory estoppel, is based upon the original promise in the
PSA. In addition, one of Yates’ prayers for relief was specific performance of Addendum #7 to
the PSA. But for the PSA and the commercial transaction, there would be no claim for relief by
Yates regarding the five-acre parcel, which was part of the original commercial transaction. More
importantly, the Parcel was never excluded from the rest of the ranch at the time the deeds were
conveyed. Pursuant to I.C. § 12-120(3), the commercial transaction regarding the sale of the ranch
is both integral to the claim and the basis upon which recovery was sought. Breckenridge, 170
Idaho at 664, 516 P.3d at 88. Consequently, the district court erred in determining that Hull Farms
was not entitled to attorney fees pursuant to I.C. § 12-120(3).4
C. Attorney Fees and Costs on Appeal
Hull Farms is entitled to attorney fees under the PSA and I.C. § 12-120(3) on appeal for
the same reasons as stated above.
IV.
CONCLUSION
The district court’s denial of attorney fees is reversed. Hull Farms is awarded costs and
attorney fees on appeal.
Judge HUSKEY and Judge TRIBE CONCUR.

4
Due to our holding that Hull Farms is entitled to attorney fees pursuant to the PSA and I.C.
§ 12-120(3), we need not address whether the district court erred in denying attorney fees pursuant
to I.C. § 12-121.
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